Zurik: Investigator says Medical Waste probe reveals fraud

Zurik: Investigator says Medical Waste probe reveals fraud

NEW ORLEANS (WVUE) - An investigator calls the findings in our Medical Waste series fraud. The series has focused on the actions of pharmacy benefit managers, or PBM's: little-known middlemen that impact your drug prices.

In New Orleans, we love our locally-owned businesses. We even have a song about the ones that "Ain't Dere No More".

And one local pharmacist says, if some Fortune 500 companies have their way, more will be added to the song - to the list of those gone.

Local pharmacists across the country have told us stories about pharmacy benefit managers, or PBM's, shorting the pharmacy on the actual cost of the drug. In other words, when a customer goes into the store, fills a prescription, the PBM sometimes pays the pharmacy well below the cost of the drug.

A pharmacist in Louisiana gave us a document that shows he bought a cream to fight eczema for $249.27. But the PBM paid the pharmacist $226.85 - the pharmacy lost $22.42 on that one customer.

Another cream cost the pharmacist $100.24. The PBM only paid $84.05 - the pharmacist had a net loss of $16.

And yet another pharmacist sent us a long list of drugs he lost money on, in just three months.

"About 8 to 10 percent of every prescription that's filled in at least independent pharmacies – and I have to think some of that is true in chains as well - is below their actual cost," says Doug Hoey, who heads the National Community Pharmacists Association.

Local pharmacists say they're losing money another way, too, on what's called DIR fees. A DIR fee is money taken from the pharmacy by the PBM long after you've paid for your prescription.

"A month later, three months later, 20, 30 percent of that transaction is taken back from the pharmacy," Hoey tells us.

The federal government set up the DIR fee as part of the Medicare Part D program. The intent was to have the fee benefit taxpayers funding the program, save them money. The Wall Street Journal reported on DIR fees late last year:

Pharmacy-benefit managers, which run drug plans for health-insurance companies like Aetna Inc. and Cigna Corp., say the fees help lower costs for the payers because they encourage money-saving measures and have performance hurdles. 'It goes a long way toward lowering the premium and making products more affordable for lots of people,' said Brit Pim, vice president and general manager of government programs at Express Scripts.

But the fee has morphed. Pharmacists say the DIR fee is arbitrary and, if pharmacies don't meet some unattainable goals, the PBM's clawback money from them.

"If the pharmacy doesn't maintain a generic dispensing rate greater than 80 - I believe it's 81 percent - they take back $7.50," says a pharmacist who asked not to be identified.

One Louisiana pharmacist provided a document showing he made $10.95 on a prescription at the time of the sale. Months later, the PBM took $30.32 from him in a DIR fee. He lost $19.27.

The PBM's say part of the fee rewards higher performing pharmacies - pharmacies that save money for customers and taxpayers.

"Their rationale for it would be to say that they're going to take those dollars and put them in a pool," Hoey says, "and for those pharmacies who score high on quality ratings, that do the right things, they'll share some of that pool back with the pharmacy - which sounds okay. I mean, that's competition, that's services for consumers. We could go for that."

But pharmacists say a fee intended to benefit taxpayers ends up mainly benefiting the PBM.

"What actually happens is, that pool is pulled aside in a trickle, is sent back to the pharmacy," Hoey says. "And the rest seems to vaporize with the plan."

We keep meeting and hearing from more people who say, like these pharmacists, some PBM's are charging them too much.

"It makes me very angry," says Jackie, a Medicare client.

Using her health insurance, one medication costs Jackie a bundle. "$1,800 would be my copay," she says.

But she was able to get the med off insurance for just $10.

"And the kicker is, when I investigated, I found out that I could have bought this particular drug over the counter," Jackie tells us. "For a total of $40."

Another drug costs her $23 with insurance, 10 without it.

"I'm very angry, I'm very annoyed," Jackie tells us. "And I feel like it's a big fraud. I think that a lot of elderly people are being defrauded."

More pharmacists have sent us examples of clawbacks, in which a PBM forces a customer to pay more than the price of the drug and the PBM claws back the extra money from the pharmacy. A spreadsheet given to us by a pharmacist in the Midwest shows the clawbacks for one month. One example was an antibiotic for Cigna charged an $87 copay. The pharmacy kept $37; the PBM clawed back $52 from the pharmacy and customer.

"I also think it's just downright wrong," says Susan Hayes with the firm Pharmacy Outcomes Specialists.

Hayes audits pharmacy claims for health plans and employers. She says she stumbled on clawbacks a few years ago and, as we found out in our investigation, two insurance companies serving about 80 million Americans sometimes overcharge their customers.

Hayes calls the clawbacks disingenuous, because the patient has no idea they're being charged a premium for medication.

"As a fraud investigator, I think it's fraudulent," she says, "because it's a fraudulent misrepresentation of what the patient has really paid. The patient did pay the $150, but the pharmacist didn't get to keep the $150. The PBM clawed back $140 of it. So the cost of the drug is really $10. Why did the member just get $10? Why does the pharmacy have to get this amount clawed back?"

After our stories aired, a Slidell resident named Tana figured out that United overcharged her. She thinks United and its PBM, Optum, clawed back $15 on a thyroid medication.

Tana says she feels "highly cheated, because we pay prime premiums for our insurance."

In fact, Tana says, she looked over her pharmacy receipts and found that more of your prescriptions than not could be bought cheaper, off insurance.

"I feel cheated and… everyone else should, too," she says.

Another FOX 8 viewer wrote us about a medication that treats heart failure. With insurance, it cost $55; without it, $38.

A PBM trade association didn't return our request for a comment or interview for this story. Optum hasn't answered any of our questions about the clawback; neither has Cigna.

In the meantime, millions of Americans could save some money if their health insurer wouldn't charge them a premium on their medication.

"I think about other people," Tana says. "I mean, luckily my husband and I both have decent jobs, but what about those who are giving up food in order to buy medicines or giving up medicines, much needed, to buy food. It just doesn't make sense."

A bill that would allow Louisiana pharmacists to tell customers when a drug is cheaper off insurance passed a House committee in Baton Rouge Tuesday. It now goes to the full House for a vote, which is likely the final step before it heads to the governor.

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